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REGISTERED No. D. 221

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No. 44] NEW DELHI, M O N D A Y, AUGUST 21, 1972/SRAVANA 30, 1894

Separate paging is given to this Part in order that it may be filed as a separate compilation.

LOK SABHA

The following Report of the Joint Committee on the Bill to provide for the acquisition and transfer of shares of Indian insurance companies and undertakings of other existing insurers in order to serve betttr the needs of the economy by securing the development of general insurance business in the best interests of the community and to ensure that the operation of the economic system does not result in the concentration of wealth to the common detriment, for the regulation and control of such business and for matters connected therewith or incidental thereto was presented to Lok Sabha on the 21st August, 1972: —

COMPOSITION OF THE COMMITTEE

Shri Darbara Singh—Chairman

MEMBERS

Lok Sabha

2. Shri Dharmarao Sharanappa Afzalpurkar

3. Shri Virendra Agarwala

4. Shri S. M. Banerjee

( 831 )

5.

6.

Shrimati Jyotsna Chanda Shri Tridib Chaudhuri

7. Shri V. Shanker Giri

8. Shri Jitendra Prasad

9. Shri Purusholtam Kakodkar

10. Shri Bibhuti Mishra

Shri Jagnnath Mishra

11.

12. Shri Shrikishan Modi

13. Shri Surcndra Mohanty

14. Shri S. T. Pandit

15. Shri Chintamani Panigrahi

16. Shri H. M. Patel

17. Shri M. T. Raju

18. Shri Sukhdeo Prasad Verma

19. Shri Vayalar Ravi

20. Shrimati Sushila Rohatgi

21. Dr. Saradish Roy

22. Shri S. C. Samanta

23. Shri Sat Pal Kapur

Shri Ram Shekhar Prasad Singrf

24.

Shri Satyendra Narayan Sinha

25.

26. Shri R. V. Swaminathan

27. Shri Tula Ram

Shri V. Tulsiram

28.

29. Shri G. Viswanathan

Shri Y. B. Chavan

30.

Rajya Sabh

Shri Babubhai M. Chinal

31.

Shri Nripati Ranjan Choudhary

32.

Shri N. G. Goray

33.

34. Shri Chandramouli Jagarlamudi

35. Shri Kanchi Kalyanasundaram

36. Shri B. K Kaul

37. Shri A. G. Kulkarni

Shri Gancsh Lai Mali

38.

Shri Balachandra Menon

m.

Shri T. A. Pai

40.

Shri D. Y. Pawar

41.

Shri K. L. N. Prasad

42.

43. Shri V. B. Raju

44. Shri H. M. Trivcdi

Shri J. P. Yadav

4.1

LEGISLATIVE COUNSEL

1. Shri S. K. Maitra, Joint Secretary and Legislative Counsel,

Ministry of Law and Justice.

2. Shri S. Ramaiah, Deputy Legislative Counsel, Ministry of Law

and Justice.

BEPRESENTATIVES OF THE MINISTRY OF FINANCE (DEPARTMENT OF REVENUE

AND INSURANCE)

1. Shri M. R. Yardi, Secretary (Expenditure).

2. Shri A. Rajagopalan, O.S.D. & Additional Secretary.

3. Shri M. K. Venkateshan, Joint Secretary.

4. Shri C. S. Anantapadmanabhan, Controller of Insurance.

5. Shri R. K. Mahajan, Deputy Secretary.

SECRETARIAT

Shri P. K. Patnaik—Joint Secretary.

Shri H. G. Paraujpe—Deputy Secretary.

REPORT OF THE JOINT COMMITTEE

1. the Chairman of the Joint Committee to which the Bill* to provide for the acquisition and transfer of shares of Indian Insurance Companies and Undertakings of other existing insurers in order to serve better the needs of the economy by securing the development of general insurance business in the best interests of the community and to ensure that the operation of the economic system does not result in the concentration of wealth to the common detriment, for the regulation and control c;f such business and for matters connected therewith or incidental there- to, was referred, having been authorised to submit the report on their behalf, present their Report with the Bill, as amended by the Com- mittee, annexed thereto.

2. The Bill was introduced in Lok Sabha on the 29th May, 1972. A motion for suspension of the first proviso to Rule 74 of the Rules of Procedure and Conduct of Business in Lok Sabha in its application to the motion for reference of the Bill to a Joint Committee of the Houses was moved in Lok Sabha by Shri Y. B. Chavan, Minister of Finance on the 30th May, 1972 and was adopted.

Thereafter, the motion for reference of the Bill to a Joint Committee of the Houses was moved in Lok Sabha by Shri Y. B. Chavan, Minister of Finance on the 30th May, 1972 and was adopted.

3. Rajya Sabha concurred in the said motion on the 1st June, 1972.

4. The message from Rajya Sabha was published in Lok Sabha Bulletin Part II, dated the 2nd June, 1972.

5. The Committee held nine sittings in all.

6. The first sitting of the Committee was held on the 19th June, 1972 to draw up their programme of work. The Committee decided that associations, organisations, companies, Chambers of Commerce & Indus- try, and individuals interested in the subject matter of the Bill and desirous of submitting memoranda thereon for the consideration of the Committee might do so by the 10th July, 1972. The Committee also decided that out of those associations, organisations, etc. who may send their memoranda, the Chairman might select a few and invite them to give oral evidence before the Committee on the 17th, 18th and 19th July, 1972.

7. 46 Memoranda on the Bill were received by the Committee from various associations, organisations etc.

•Published in the Gazette of India, Extraordinary, Part II, Section 2, dated th* 93th Mav. 1972.

8. At their second, third and fourth sittings held on the 17th, 18th and 19th July, 1972 respectively, the Committee heard the evidence given by 13 associations, organisations, etc.

9. At their fourth sitting, the Committee decided that (i) the evidence given before them, might be laid on the Tables uf both the Houses; and (ii) two copies each oi the memoranda received by the Committee from various associations, organisations, etc. might be placed in the Parlia- ment Library, after the Report of the Committee was presented.

10. The Committee considered the Bill clause-by-clause at their sit- tings held on the 20th July and 16th and 17th August, 1972.

11. The Report of the Joint Committee was to be presented by the 31st July, 1972. The Committee were granted extension of time on the 31st July, 1972 upto the 21st August, 1972.

12. The Committee considered and adopted the Report on the 17th August, 1972.

13. The observations of the Committee with regard to the principal changes proposed in the Bill are detailed in the succeeding paragraphs.

14. Clause 3.—The Committee feel that the Act should be made effec- tive as early as possible and, for that purpose, there should be an over- all time-limit beyond which the implementation of the Act may not be delayed. Therefore, in the definition of "appointed day" in part (b) of this clause, they have inserted the words "not being a day later than the 2nd day of January 1973".

15. Clause 4.—The amendment is clarificatory.

16. Clause 7.— Sub-clause (1).—It has been made clear that the refer- ence is to the Indian insurance company.

Proviso' to subfdause (1).—The Committee feel that every employee ihould decide before the appointed day as to whether he would like his services to be transferred to the Indian insurance company. The pro- viso has been amended accordingly.

Sub-clause (2).—The Committee feel that there should be some time limit within which such a question can be referred to the Central Gov- ernment for decision. They feel that a period of two years from the appointed day would be reasonable for the purpose. The sub-clause has been amended accordingly.

Other amendments made in this clause are of drafting or clarificatory nature.

'

17. Clause 8—The Committee feel that there should be some provi- sion that if any employee of the existing insurer does not become an employee under the nationalised set-up, there should be suitable appor- tionment of the assets belonging to the provident, superannuation or other funds in which he has interest.

A new sub-clause (1A) has accordingly been inserted.

Other amendments made in this clause are of drafting nature,

18. Clause 9.—According to the existing provisions of the Bill, the General Insurance Corporation has to be formed after the appointed day. Since it is the duty of the Corporation to distribute the amounts to shareholders and since such payments to shareholders would fall due on the appointed day it would be necessary to ensure that the Corporation comes into existence before the appointed day. The amendment made seeks to ensure that the Corporation may be established before the appointed day.

A new sub-clause (3) has been inserted providing that the require- ment of the Companies Act, 1956, to add "Limited" as the last word of the name of a company need not be complied in the case of the General Insurance Corporation, although it would be formed and registered as a Company under that Act. The existing sub-clause (3) has been omitted.

19. Clause 10.—This amendment is consequential to amendment made in clause 9 whereunder the Corporation will be formed before the appointed day.

20. Clause 11.—Amendment made in this clause is a verbal correction.

21. Clause 13.—The existing clause empowers the full payment to shareholders whose claims do not exceed Rs. 25,000 but in the case of shareholders whose claim exceeds Rs. 25,000, the amount is to be paid to them in three equal instalments. The Committee feel that this pro- vision would result in discrimination between small shareholders and big shareholders and that the discrimination should be removed by provid- ing that every shareholder, whose claim does not exceed Rs. 25,000, be paid in full, and where the claim, of the shareholder exceeds Rs. 25,000, he should be p a i d R s. 25,000 and the balance should be paid to him in three equal annual instalments.

Amendments have also been made in this clause to clarify that the amount payable to Indian insurance companies should be paid in cash; the payment of the amount will fall due on the appointed day; and inter- est will be payable on all delayed payments. Further, the Committee feel that there should be a time-limit within which payment of amount is to be made to foreign insurers. They consider that payment should be made within three months from the appointed day.

The clause has been amended accordingly.

22. Clause 14.—The Committee feel that practical difficulties with re- gard to the distribution of the amount would arise unless the resolution is passed before the appointed day or the meeting is convened thereafter with the approval of the Central Government. The amendment seeks to avoid that difficulty. The other amendment in the clause is of a drafting nature.

23. Clause 15.—Since it is the Corporation which will distribute the amount, the amendment clarifies that the responsibility for depositing the amount in court would rest with the Corporation.

24. Clause 16.—Since the General Insurance Corporation is also a company, the amendment clarifies that the lour companies referred to in this clause are in addition to the Corporation.

25. Clause 18.—The Committee consider that the words "by way of guidance" are inconsistent with the idea of a direction. These words have, therefore, been omitted.

26. Clause 19.—The amendment is of a verbal nature.

27. New Clauses 22 and 23.—The Committee feel that there should be provision in the Bill to empower the Central Government (i) to trans- fer employees from the Corporation to the acquiring companies or vice versa, or from one acquiring company to another, if such transfer is desirable in the best interests of the nationalised set up; and (ii) to give directions to the Corporation as well as to the acquiring companies in regard to matters of policy involving public interest.

These two new clauses have accordingly been inserted.

28. Clause 24 (Original Clause 22),—The amendment has been made in order to ensure that the sub-clause (2) will not affect the Life Insu- rance Corporation, in so far as it carries on life insurance business or capital redemption and annuity certain business.

29. Clause 25 (Original Clause 23).-^The amendment is of a verbal nature.

mm

30. Clause 27 (Original Clause 25).—Since more than a year has elapsed after take over of the management by Government, all policies issued prior to 13th May, 1971 would have expired and there will be only outstanding liabilities. The words "amounts of insurance" are therefore considered to be inappropriate. They have been substituted by the words "liabilities which have arisen".

31. Clause 28 (Original Clause 26).—The existing clause empowers the acquiring company to apply for relief against fraudulent or onerous transactions entered into within three years immediately before the date on which the management of the undertakings of the general insurance companies was taken over by the Central Government. The Committee feel that since the possibility of the nationalisation of general insurance business was already in the air for the last three years, a time-limit of three years for the avoidance of fraudulent or onerous transactions would not be sufficient. The Committee, therefore, feel that this period should be extended to five years.

The clause has accordingly been amended.

32. Original Clause 27.—The existing clause empowers the repatria- tion of assets of foreign insurers. The Committee feel that no statutory provision for repatriation of such assets is necessary because the matter may be regulated by administrative orders.

The clause has, therefore, been omitted.

33. Clause 31 (Original Clause 30).—The words "or other employee" have been inserted to make the intention clear.

34. Clause 33 (Original Clause 32) .—The amendment is of a verbal

nature.

35. Clause 35 (Original Clause 34) .—A number of witnesses who gave evidence before the Committee expressed a fear that the sections other than those referred to in sub-clause (1) of original clause 34 might not be applied to the Corporation and its subsidiaries, i.e., the Central Gov- ernment might not take action promptly to implement the provisions of sub-clause (2). The Committee have, therefore, made a more positive provision that all the provisions of the Insurance Act would apply to the Indian insurance companies, subject to such exceptions, restrictions and limitations, if any, as the Central Government may, by notification, specify.

36. Clause 36 (Original Clause 35).—This clause exempts the general insurance business carried on by a State Government in relation to its properties or undertakings wholly or mainly owned by it. The Commit- tee feel that this exemption should also extend to the properties belong- ing to the semi-government bodies, State statutory Boards or bodies and industrial and commercial bodies wherein the State Government has a substantial financial interest, whether as a shareholder, lender or guarantor. Sub-clause (1) (a) has been amended accordingly.

Amendment in sub-clause (1) (b) has also been made because State Governments are carrying on business after 13th May, 1971 and they should be allowed to do so till the commencement of the Act.

Amendment in sub-clause (1) (e) seeks to correct the names.

Amendment in sub-clause (2) is of a clarifkatory and drafting nature. The amendment seeks to clarify that the insurers in question would be exempt from all the provisions of the Act.

37. Clause 39 (Original Clause 38).—The Committee feel that original clause 38(2) (a) is not necessary because the Central Government is giving the amount by way of capital to the Corporation and not in the form of loan. It has, therefore, been omitted.

38. New Clause 40.—Section 14 of the General Insurance (Emergency Provisions) Act, 1971 prohibits the Controller of Insurance from issuing any new Certificate of Registration, Once the Bill is passed Into law, the Controller of Insurance will have to issue Certificates of Registration to the Corporation and acquiring companies and possibly also to any insurers exempted under original clause 35(2). Hence, section 14 of that Act is sought to be omitted.

39. The Schedule.—The Committee have amended the Schedule.

40. Clause 1.—The Committee feel that in view of the changes pro- posed in the Bill, it is necessary to ensure that the Act may come into force as soon as it received the assent of the President. Sub-clause (2) of this clause has therefore been omitted.

41. The Joint Committee recommend that the Bill, as amended, be

passed.

DARBARA SINGH,

NEW DELHI;

August 21, 1972

Chairman,

Joint Committee.

Sravana 30, 1894 (Saka)

MINUTES OF DISSENT

I

We are definitely of the opinion that the amount to be paid for nationalisation of general insurance business is too high and without any- rational basis. The last-minute amendment to the Schedule of the Bill is nothing but a calculated surrender to the big business houses. The Government did not disclose! the principles on the basis of which the amounts payable have been calculated. Since under the Constitution of India, as amended, the question of adequacy of the amount payable can- not be questioned, there is no reason to fix the amount payable at so high figures as has been done in the Bill. The interests of small shareholders of the different insurance companies could have been protected and no reasonable ground exists or have been put forward for paying uncon- sciously inflated amounts to holders of large-blocks of shares, which are nothing but the holdings of big business houses.

Further, so far as foreipn insurance companies are concerned, the amounts fixed to be naid to them, are not onlv disproportionately high, but they are being allowed to receive payments directly at a time. The foreign companies did not generally build up reserves in this country and no reasonable basis exists or has been suggested for the preferential treatment to foreign monopolists or bie business houses who have never taken thp interests of this rountrv into consideration. This token amounts, if at all should have been paid to the foreign insurance rom- paies.

The provision in the Bill regarding the setting up of a Corporation and further insurance companies, numbering four, is most objectionable not only from the practical point of view of proper management of gene- ral insurance business in this country but also at it seeks to create arti- ficial divisions, the real object of which is to create divisions amongst the employees and the staff. Setting up of more than one unit will not only give rise to unhealthv competition amongst the units but will also result in unnecessary setting up of top-heavy administration. It Is signi- ficant that almost all the trade unions or employees organisations have opposed the proposal of setting up more than one company.

Clause 22 of the Bill has clearly the object of keeping the employees

at the mercv of the Central Government. No reason exists nor has been put forward why the Central Government should acquire the right of control even with regard to what should ordinarily be routine matters. This provision will naturally rouse grave suspicions in the minds of the employees, as puch powers in a very large number of cases existed not for bonafidc purposes but by way of victimisation. So we suggest that this clause should be deleted.

SARADISH ROY

TRIDIB CHAUDHURT

NEW DELHI

August 18, 1972.

II

After a careful examination of such relevant data as were placed be- fore the Committee and of the evidence that was tendered by both Indian and foreign witnesses, I find it difficult to resist the conclusion that the majority view expressed in the Report on Section 11 and the attached Schedule is neither a correct view nor a fair and reasonable view. I am, therefore, compelled to append the following minute of dis- sent.

Clause 11 of the Bill together with Parts A and B of the Schedule indicate the amounts to be paid to the Indian and foreign insurance companies for the transfer of shares of each Indian insurance company and in the case of foreign insurance companies for the transfer and vest- Ing In the Central Government of each such undertaking. No clarifica- tion was given to the members of the Joint Committe by the Govern- ment of the basis of or the principles underlying the determination of the amounts. It would appear, however, from a study of the amounts, as set out in the unamended schedule, that they were determined in some such manner as is indicated in the following two paragraphs. The amended schedule gives larger amounts to some 33 companies, but the basis on which the additional amounts are given is wholly Inexplicable and arbitrary. The 33 companies concerned benefit in varying degrees, but the new revised schedule continues to suffer from all the shortcomings of the original schedule.

In so far as the mutual insurance companies are concerend, the paid to each of them appear broadly to equal 9 times the average of the dividends paid by each of them during the year 1967, 1968 and 1969. If in the case of any company 9 times the average dividends was found to be less than the company's paid up capital, the amount payable appears to have been fixed at the paid up capital of such company. Where an Indian insurer wai found not to have declared any dividend during the years in question the amounts payable to such company appear to have been fixed at their issued capital.

In so far as the mutual insurance companies are concerned, the amounts to be given to them appear to be determined in a wholly arbit- rary manned.

The amounts payable to the foreign insurers appear to have been fixed broadly at 9 times the net profits earned by them during the vears 1967, 1P68 and 1969.

The Joint Committee had no other data nor were any clarifications given to assist them in determining whether the amounts in bo paid for the acquisition of the companies w?rc equitable, or fair or reasonable. It was fortunate for the Committee that many of the memoranda received by it were drawn up with great care and study and whether one agreed with their approach or not, thev certainly furnished valuable data, care- fully analysed for arriving at a reasonable appreciation of the problems that had to be considered by the Committee,

Un a study of ihe amounts proposed tu be given to insurance com- panies, loreign and Indian, and of sucii hnanciai data as were available ax resptct ol them the following conclusions emerged:

(1) The 'amounts' shown against the foreign insurers as compared tc the •amounts' shown against Indian insurers leave no room for doubt that the former have been more favourably treated. It is difficult indeed , to understand why it has been decided to discriminate against our own

nationals. IN ever before has a country been known to favour foreigners as against its own nationals. As the amount receivable by the foreign msureis has been fixed on the basis 01 the.net profits without any deduc- tion whatsoever multiplied by the factor of 9. it is easy to see that the quantum of the difference would be quite considerable as dividends are paid after making provision lor reserves, etc., and such provisions have oeen known to amount to as high as percentage of the net profits as 66- There is no warrant for such discrimination. No attempt was made by the Government to explain to the Committee its reasons for such dis- crimination. The fair tning to do would be to remove this discrimination tuid to give Indian insurers 'amounts', on the same basis as the foreign insurers.

(2) It is obvious that those Indian insurers who acted imprudently and declared larger dividends carrying less to reserves, receive larger amounts than those who acting more prudently carried larger sums to reserves. II our assumption for the formula adopted between Indian in- surers is correct, there can be no room for doubt that we shall have re- warded the underserving, and punished those who will have contributed larger assets to the new General Insurance Corporation. Indeed so blatantly unjust and unfair is the operation o£ the 'formula' that for ins- tance one company receives an 'amount' which is equal to 7 per cent of its net assets while another receives an amount equivalent to 88 per cent of its net assets. The formula is clearly deficient in that the amount payable to a company bears no relation whatsoever to the assets that the companies bring in to the new corporation.

(3 As between Indian insurers themselves it is found that some re- ceive for larger amounts than others for no reasons that are self-evident. It may be admitted that there will always, be marginal cases of injustice in operating any formula, however carefully devised. And where an in- justice is apparent the fair thing to do would be to deal with such margi- nal cases in a special manner, and not let them be affected adversely for no fault of theirs.

Under Article 31 of the Constitution as it now stands, the responsibi- lity of the Parliament becomes far greater than before. It has now be- come the responsibility of the Parliament itself to see that any enter- prise or private property taken over for a public purpose and in pur- suance of the objectives specified in sub-clauses (b) and (c) of the Direc- tive Principle No. 39 is compensated by an amount which is fair and rea- sonable for it should not be forgotten that the right to private property has not yet been abolished. And it was made clear in the course of the debate in the Parliament when the Twenty-Jflfth Amendment was dis- cussed that thy object to the amuidment was nut to expropriate or to con- fiscate but only to see that Government was not required to pay as com- pensation prohibitive sums which would act as a deterrent to the execu- tion of important and very essential social and economic objectives of the

Government. It is on the basis ol this undertaking of Article 31 as it now stands, that I venture to suggest that the amounts shown as pay- able to Indian companies as a whole are grossly inadequate. I suggest that a basis fair to both insurers and also to Government would be to determine the amounts in such a way that they would be generally ac- cepted as fair and just. To my mind, the only proper basis would be to fix the amounts at the level of assets minus liabilities as on 2nd Jan- uary,, 1973, that is the date of take over of the business. The assets and liabilities could be calculated on the lines of the provisions contained in Section 52 (J) of the Insurance Act, 1938.

NEW DELHI; H. M. PATEL.

August 18, 1972.

Ill

The quantum of compensation proposed in the new Schedule for the Insurance Companies has been determined on an arbitrary basis. The Government claims that a common basis for compensation has been pro- vided both for indigenous and foreign insurers. But the process of its determination has been shrouded in an esotericism; which has not en- abled the Joint Committee to scrutinise the schedule objectively. After having received vast sums at the rate of Rs. 30 lakhs per month, for surrendering the management of the Companies, extending over a period, payment of further compensation on such a generous scale, is un- conscionable. In the name of 'poor shareholders' Insurance magnates have been able to receive about Rs. 39 crores as compensation which does not fit in exactly with the intentions of the 25th Amendment of the Constitu- tion.

The "appointed day" for the effectiveness of the Act has been fixed in clause 3, not being a day later than 2nd day of January, 1973, which in effect means the continuance of the Insurance Companies till that date. This could entail continuous payment for acquiring the management which will be in addition to the compensation proposed. The appointed day should therefore be advanced suitably, particularly in view of clauae 9. which ensurers that the Corporation may be established before the appoin- ted day.

NEW DELHI;

SURENDRA MOHANTY.

August 18, 1972.

IV

I have read with a sense of disappointment the majority report of the Joint Committee. No doubt, the amounts payable to a few companies In part 'A' of the Schedule have been increased but this increase besides not being very much of an improvement does not, as in the case of the original sums, reveal any basis. Moreover, there is absolutely no change in any of thej substantive provisions of the Bill except for minor and inconsequential changes made in a few clauses. It Is regrettable that the reasoned arguments of the many important and eminent witnesses who gave evidence before the Committee have made only a marginal impact if at all.

2. This particular Bill is historic only for its timing to which aspect I shall come later. By itself the Bill does not represent any kind of attack upon a prevailing system that requires to be changed in the in- terests of the people. It is not even designed to redress any specific grie- vance. The style and technique of the Bill arc, in a way guilt-ridden and the conscience is sought to be solved by giving a fairer deal to tlu- foreignur. AJ no one will accuse me ol being a communist, I con, JII a way, fall back upon Karl Marx to support my point that the Bill is no more than the environmental product which will always seek to prop up the image of the ruling class. There is too much of irrationality as to form a pattern. And there is too much of a pretence to conceal an un- reasonable basis.

3. Coming to procedures, I would like to record my strong disapproval. The Insurance Bill affects a number of persons. Many representative associations and individuals had requested that they might be given an opportunity to give evidence before the Committee. But for some inex- plicable reasons they have been denied the opportunity. This is not in consonance wilh democratic processes and is a grave injustice to them. Moreover, the Bill was at first rushed through the Joint Committee in a period of just four days which comprised three days of evidence and one day for clause-by-clause discussion. No general discussion was allowed. Only the semblance of consultation and discussion was gone through, so much so, that on second thoughts, it was felt that further discussion was necessary.

4. The next point I wish to refer to is of a constitutional nature. In a Bill of this kind where payments are sought to be made for the take over of a business, it is only appropriate that members of the Joint Com- mittee should know on what basis the payments are being made to the insurance companies. Inspite of information being sought on the matter. Government did not care to prepare any background paper or take the members into confidence, even informally, in regard to their calcula- tions with respect to either the original amounts fixed for all the com- panies or the revised amounts fixed later for a few companies. I cannot imagine how members can assent to a proposal the basis of which they do not know. I am of the opinion that the basis of payments should be spelt out in the Act itself. This is because that those who are dispos- sessing the property of the citizen and those who are dispossessed of their property should know the criterion on which the payments are made. The law maker as well as the citizen must be satisfied that there is no discrimination between different sections or groups of persons.

5. As Government had not indicated the basis either in the case of original sums proposed to be given or in the case of the revised amounts payable to some companies, one has to fall back on surmises. As for the latter amounts, I am still in the dark as to whether any basis; can at oil be thought of. However, the original amounts payable to Indian com- panies seem to have been fixed on the basis of nine times the average of the dividends paid during the years 1967—69 and foreign companies on the basis o[ nine times their net profits for the same period. This was grossly unfair and discriminatory. By no means can dividends be a cri- terion. In the absence of any formula for fixing the amounts for various companies, one can only come to the conclusion that this exercise by

way of the rule 01 the tliumb meLhod is wholly undemocratic. Nor is it right to assume that after the Constitution 25th Amendment Act when- ever any industry or a business is taken over just any amount can be paid on the wnim ot Government and Parliament.

6. During the debate on the 25th Amendment Bill, the Prime Minister quoted witn approval the lale bhri Jawaharlal Nahru that "Any Parlia- ment representing the entire community of the nation would certainly not commit a fraud on the Constitution and would be very much con- cerned with doing justice to the individual as well as to the commu- nity". What is contemplated under the Constitution Amendment Act is only that the dilatory processes of resort to a Court of Law should be done away with. The Prime Minister clearly conveyed that though the amounts fixed for acquiring property would not be justiciable. Parlia- ment would not be unjust to the individual or to the society from whom the property is being acquired. The Constitution Amendment Act bars ^only judicial scrutiny. It does call for fair, reasonable, equitable and just payments being made on nationalisation so long as we believe in a democratic set up. Expropriation may be a natural order in an autocratic set up, but it is certainly an anathema to a free democracy.

7, It is important to realise, however belatedly that this Bill which comes in the wake of the Constitution 25th Amendment Act has a histo- ric importance. It behoves us, therefore, firstly as members of the Joint Committee and then as members oi Parliament to see thai justice is done to those whose property or rights are taken. It should be remembered that there are over 40.000 shareholders of these companies who belong to the middle and lower income groups. 60 per cent of these persons have invested in shares worth only Ks. 2,000 to Rs. 3,000 of their lifes savings. It is they who will be affected. And over four hundred thous- and middle class families who have invested in the Unit Trust of India may well face the same fate if wrong principles are accepted by Parlia- ment. It will shake the confidence of the investors in industrial securi- ties as much as in the justice of Parliament.

8. As I had stated earlier, no formula is discernible in respect of the revised amounts payable to some insurance companies. However, it seems that out of the total amount payable to all the insurance compa- nies, nearly 50 per cent of it will be paid to Government insurance com- panies. In any event in regard to the amounts payable to the Indian insurance companies, there is discrimination inter se Indian insurers and also between Indian and foreign insurers. It was stated by several wit- nesses that the foreign insurers are in fact being paid more liberally, while justice demands that the Indian insurers 'should be paid more, because their assets and reserves are here within the country, while the foreign insurance companies remit their reserves except unexpired risk reserves and working funds. During the course of the evidence, wit- nesses had given several criteria on which reasonable payments may be made, such as, assets minus liabilities under Section 52J and Schedule VIII of the Insurance Act, 1938, capitalisation of net profits, net profits plus free rusc.Tves, etc. None of the suggestions has found favour with the majority members of the Joint Committee. This is perhaps to be expected because of the mood of the majority oi the members and the manner in which the whole matter has been rushed through.

9. While on the question ul Ihe adequacy ol Uie pa> inputs, I wish to state that there in a gone] deal of jnisundorstandinf; about what the re- serves ot an insurance company represent. No distinction is being made between i'ree reserves and reserves lor unexpired risks. One view is that the workers have a right to the reserves and that it is not entirely tho shareholders money. This is not so. After the, workers have been paid their wages and the bonus due to them, they have no more inte- rest or claim on the profits 01 the company. It is also argued that tho reserves should go to the new owners of the company. While introduc- ing the motion to refer the Bill to the Joint Committee, the Finance Minister stated that public interest requires that general insurance should on nationalisation be in a position to offer fair premium rates to policy holders and that for this purpose, it is essential that it should not be deprived of the reserves which have been built up over the years out of past premia and which are necessary for the sound conduct of tho busi- ness. There is little justification for this proposition. It was open to the companies to appropriate profits in whatever manner they liked and some companies in fact had liberally distributed dividends without car- ing for the long term interests of the company. On the otherhand, some had conserved their profits and taken a portion of them to free reserves in order to put the company on a sound and firm footing and enable it to offer better services. The appropriations to such reserves represent the shareholders equity. It is, therefore, fallacious to argue that these re- serves do not belong to the ^.h.'ij-oholflor.^ nnrf thnt thev should really go with the acquired company.

10. Looked at from every point of view the assumption made and the basis of valuation adopted for the Indian companies do not bear scru- tiny. While T would very much like that payments should be made on the assets minus liabilities basis, I am making here a very reasonable suggestion taking care that no discrimination is made between Indian and foreign insurers, While nine times the average profits has been adopt- ed for payments to foreign insurers, I 'suggest that the pavments to Indian insurance companies shall be 15 times the average net profits of the years 1969, 1970 arc! 1971. This has ample justification, Indian companies have their entire assets, general reserves, the unexpired risk reserves and all other funds available for utilisation in this country. On the other hand, the foreign companies retain in this country only thp unexpired risk reserves and such working funds as they deem necessary. All other funds and profits are remitted to their own countries. Further, the Indian companies have a long record of competence and efficiency. Both in India and abroad they have over the years built up goodwill. They rave also a fine organisational set up, competent personnel and workers at all levels and big offices. Ml of which will be available to Government.

11. It is also appropriate that the net profits basis should not relate to years 1967, 1968 and 1969 which are unrealistic. After 1968, the insu- rance companies have been doing better and their performance was much better than in the previous years. Therefore, the years to be taken for this purpose should be 1969. 1970 and 1971.

12. The scheme of tho Act is to set up the General Insurance Cor poration of India n? the ;wfy hody and to form four regional companies which will ultimately be subsidiaries of the Corporation, The functions of

the General Insurance Corporation of India will be to advise the compa- nies in the matter nf setting up ;;r>und practices and rendering efficient services to the holders of the policies of general insurance. These four regional companies will be formed by the amalgamation and merger of the existing insurance companies. My suggestion is that there should be four autonomous corporations instead of four companies which are in- tended to be subsidiaries of an apex body. If they are subsidiaries, they will be subject to the control of the apex body and so them is bound to be interference in day-to-day working and the autonomous functioning of tho subsidiaries will not in reality obtain. There will not also be com- petition between the subsidiary companies which is the objective. The idea of competion being welcome, the set up should be four autono- mous bodies working independently and in competition with each other. This will also result in better services to the policy holders with possi- bilities of reduction in premia rates and providing more employment opportunities.

13. Sub clause (2) of clause 13 states that where the amount is paid in instalments, each instalment will carry interest at the rate of 4 per cent per annum from the appointed day.

This is a very low rate of interest in the light of the pravailing interest rates. The current market rate of interest is more than 12 per cent. Companies declare about 8 per cent to 10 per cent dividend normally. Under the recent amendments to the Income-tax Act, for delayed payment of tax on the part of assessees and for delayed refunds on the part of Gov- ernment, interest is payable at the rate of 12 per cent. I think it is only reasonable that at least 12 per cent interest should be paid on the instal- ments.

14. According to the provisions of the Bill, shareholders will be paid directly by the General Insurance Corporation. The insurance compan- ies as such will not receive the amounts. Section 14(1) of the Bill, how- ever, provides that the majority in number of the shareholders represent- ing two-thirds in value of the amount payable to the insurance companies may agree at a meeting specially convened for the purpose that the amount payable instead of being distributed among the shareholders shall be given to any other person or body of persons as the members may nominate either at a meeting convened for the purpose or subsequently for the pur- pose of carrying on any business. In my opinion, the conditions are too rigorous. It should suffice if a majority in number of the shareholders representing 51 per cent in value of the amount payable to the insurance companies agree that the amounts payable to them may be given to any body of persons as they may nominate for the purpose of carrying on any business. In that case, the amounts payable to such of those shareholders who so agree should be capable of being given to the body of persons nominated. The other shareholders wanting the payment to be made to them directly should, however, be eligible to receive it. This, I believe, would serve the purpose of the clause, namely, that sizeable amounts can be made available to any body of persons for the purpose of carrying on any business useful for the society,

15. Finally, T would like to say that though the suggestion for protect- ing tho interest's of the staff of the Calcutta Claims Bureau has not been

incorporated in the Bill, I am glad that the majority report has taken due note of it.

16. I should like to conclude, as I began, that the entire scheme of the Bill, while seemingly revolutionary, centres round force that seeks to achieve maximum publicity with minimum offence to shibboleths that are cleverly concealed. One can go too far in this game. Indlai, as a nation, is growing maturer in every field including economic capabilities. We are emerging as an exporter of capital and know-how. Our Govern- ment, from all accounts, is anxious to project, rightly, India's image abroad. I, for one, strongly feel that unless we treat our nationals in our own country fairly, we cannot convince other people, either in develop- ing or developed countries, that our Government can look after the inter- ests of Indians abroad.

17. My dissent, if I may say, is forward looking. I still hope that at the stage of discussion in both the Houses of Parliament, Government will accept all reasonable amendments that will remove the discriminatory and expropriatory character of the Bill for the good reasons that I have stated.

BABUBHAI M. CHINA1 NEW DELHI; August 18, 1972.

V

I regret I have to submit a minute of dissent to an otherwise opportune piece of legislation.

As will be appreciated, especially in view of the statement in the preamble to the Bill that the Bill is intended inter alia "to ensure that the¹ operation of the economic system does not result in the concentration of wealth to the common detriment", that Chapter IV of the Bill which deals with the "amounts to be paid for transfer and vesting of shares and under- takings" is one of the most important, if not the most important provisions of the Bill. The above mentioned guideline statement made in the preamble is again underscored in Clause 2 which is a declaration of the policy of the State in consonance with principles specified in clause (c) of Article 39 of the Constitution which I quote below:

"That the operation of the economic system does not result in the concentration of wealth and means of production to the com- mon detriment".

The simple question is does the Bill as it stands in its final form, do justice to these lofty directives?

It is necessary to point out here that no sooner the Joint Committee commenced its deliberation of the Bill, more than one member, amongst whom I was one, expressed their desire to know the basis on which the amounts mentioned in parts A and B of the Schedule were arrived at. In fact it can be stated without any fear of contradiction that this problem

alone plagued the proceedings of the Committee from the beginning to the end. Again the most prolonged and the most weighty arguments were submitted during evidence and discussions on the question of the amount to be paid after the take over. The insistence on evolving a ratio- nal formula was rendered all the more necessary in view of the fact that after the 25th Amendment of the Constitution, the Parliament was ex- pected to function in place of the Supreme Court. This implied that the Parliament must not decide the amount to be paid in lieu of compensa- tion in an arbitrary manner but must decide on the basis of certain well- defined principles. We had also to bear in mind that this was going to be the first legislation after the passing of the 25th Amendment to the Constitution and any formulation we laid down in regard to the fixing of amounts to be given after a take over, would influence similar legislation in the future.

The original Schedule suffered from two evident defects: One, it failed to apply the same yardstick to the foreign and Indian Insurance Com* panies as regards the amounts to be paid. Two, it was also discriminatory to Indian companies inter se. It is most surprising that the amended Schedule also failed to remove the lacuna. It was as if a wrong turn was taken to start with and when the mistake was pointed out another wrong turn was taken to correct the first. The revised Schedule, I am sorry to • say, is no less arbitrary. The only difference between the two Schedules Is that the amended version shells out to the shareholders Rs, 5 crores and odd of the tax payers money in addition to what was stipulated in the original.

It was not as if no other formula was forthcoming in the Joint Com- mittee. A suggestion was made that "an amount equal to five times the average of the net profit of the years 1967, 1968 and 1969" be given. This amendment if accepted would have furnished a firm and uniform basis. But it failed. The suggested multiple could have been changed but it would have at least provided a rational ground for calculating the amount. It was also suggested that an amount equal to the paid up capital should be given. It was also not found acceptable. However I would like briefly to state here the logic behind the latter amendment:

It is my firm opinion that if the directive principle inscribed in clause (C) of the Article 39 of the Constitution is to form the sheet anchor of our future economic policy, on element of expropriation becomes in- evitable. The present economic fabric based on the principles of private property cannot be restructured without expropriatory measures which will have to be harsh in some cases and not so harsh in others. Even take-overs without compensation will be justified at certain time's. But as the shareholders in the Insurance Companies generally are from the middle and lower middle class, a position more considerate h called for. On the other hand two facts should not be lost sight of. These share- holders have in many instances recovered fat dividends totalling to many times the face value of their shares and the prosperity their com- panies are today enjoying has become possible because of the unlimited scope for expansion assured by the unprecedented economic develop- ment during the last twenty years due to certain national policies. The huge reserves, the rtmreciation in value of assets like buildings were but the by-products of the general economic development in the urban as well as the rural areas. The memoranda submitted by the Insurance

companies have admitted that in the fortunes of their companies the most significant watershed was the attainment of Independence. The moral of the statement is plain, which is that had not the sacrifice and the suffering of the common man culminated in political freedom, the economic boom, enjoyed by the Insurance companies would have been such a manner that what was contributed by the nation goes back to absent. Is it not fair then to fix the amounts at the time of take-over in the nation, and what was originaly contributed by the shareholders is handed back to them? This is the line of reasoning behind the latter amendment.

As this amendment was not accepted, nor was any other firm logical basis for fixing the compensatory amounts was given, I am constrained to write this minute of dissent.

NEW DELHI; N. G. GORAY.

Auflu#t 19, 1872.

VI

We are constrained to submit our note of dissent although we stand for nationalisation and hail Government's decision to take over General Insurance. Our stand throughout had been not to pay any amonut or compensation to foreign and Indian companies which are owned by the monopoly houses. It was argued on behalf of these companies that majo- rity of the shareholders belong to middle classes and as such this amount will benefit those shareholders. We have not been provided with any statistics as to how many shareholders are solely depending on dividends for their livelihood. It is really a tragedy that these com- panies, both foreign and Indian, are getting this huge amount as a re- ward for mis-management, mal-practices and manipulations. Another sum of Rs. 5.2 crores has been added and thus the total amount now payable by the Central Government will be to the tune of Rs. 38.23 crores. It was originaly kept at Rs. 33, 03, 31, 399. It is said that this has been done in order to remove discrimination between the foreign and the Indian companies in the matter of payment of amount and to make same adjustments in the amounts specified in the schedule. This last hour amendment of the Schedule in order to benefit the Indian com- panies makes us suspicious that Government had ultimately yielded to the pressure of the big monopoly houses who control these companies. It would not be out of place to mention here that while nationalising Life Insurance Company in 1956, a sum of Rs. 5 crores was paid to 256 com- panies. In our opinion Government has totally ignored the purpose for which 25th Amendment of the Constitution was brought and passed in Lok Sabha by a massive majority. This decision of the Government has once again opened the flood gates and the monopoly houses have succeed- ed in getting their pound of flesh.

We also could not find any force in Government argument of having four companies. We still feel one autonomous corporation with zonal and divisional offices like Life Insurance Corporation, should have been the best solution. Establishment of four companies will result in top heavy administration and more bureaucratization. This, in our opinion, In flPainst Government stand of reducing the top heavy administration.

We, therefore, feel that there should be only one autonomous Corpora- tion.

We are thankful to the Finance Minister for his assurance that the employees of Calcutta Claims Bureau and like organisations will be absorbed and their interest will be fully protected. Government should have nationalised Calcutta Hospital and Nursing Home Benefit Associa- tion Limited and the Fire Salvage Services Association, Bombay and brought them within the purview of this Bill. The employees of Cal- cutta Claims Bureau should also have been brought within the purview of the Bill. We oppose clause 22 of the Bill which has been introduced because this would place the employees at the mercy of the Central Government. There is no reason why Central Government shoull ac- quire the right of control even with regard to what should ordinarily be routine matter. This provision is bound to create suspicion in the minds of the employees as these powers might be used not for bonafide pur- poses but for victimization. We hope this clause would be deleted.

In the end, we once again express our utter disappointment at the manner in which the quantum of amount has been increased to help those monopoly houses who are responsible for holding the country to ransom.

NEW DELHI;

S. M. BANERJEE

August 19, 1972. BALACHANDRA MENON.

THE GENERAL INSURANCE BUSINESS (NATIONALI-

SATION) BILL, 1972

ARRANGEMENT OF CLAUSES

CHAPTER I

PRELIMINARY

CLAUSB< s

 1.    Short  title.
 2.    Declaration  as  to  the  policy  of  the  State.
 3.    Definitions,
                            CHAPTER  II
  TRANSFER  TO  PUBLIC  OWNERSHIP  OP  GEWERAL  INSUHANCE BUSDOWS
 4.    Transfer  of  shares  of  Indian  insurance  companies.
 5.    Transfer  of  undertakings  of  other  existing  insurers.
 6.    Effect  of  transfer  of  undertakings.
 7.    Transfer  of  service  of  existing  employees  in  certain  cases.
 8.    Provident,  superannuation,  welfare  ftnd  other  funds.
                           CHAPTER  III
              GENERAL  INSURANCE CORPORATION OF INDIA
 0.    Formation  of  General  Insurance  Corporation  of  India.
10.    Transfer  to Corporation of shares vested in Central  Government
                           CHAPTER  IV
               AMOUNTS  TO  BE  PAID  FOB ACQUISITIONS
11.    Amounts  to be paid  for  transfer  and vesting  of  shares or  under-
         takings.
12.    Disbursement  of  amounts  by  Corporation.
13.    Mode  of  payment.
14.    Amount  payable  to  shareholders  may  be paid to  named  persons
          instead  in  certain  cases.
15.    Payment  into  court  in  case  of  rival  claims.
                            CHAPTER  V
    SCHEME  FOR  REORGANISATION OF  GENERAL  INSUHANCE BUSINESS
16.    Schemes  for  mergers  of  companies, etc.
17.    Schemes  to  be  laid  before  Parliament.

CHAPTER VI

FUNCTIONS OF COBPORATION AND ACQUIRING COMPANIES AND THMB

MANAGEMENT

1

CLAUSBE

18.    Functions  of  Corporation.
19.    Functions  of  acquiring  companies.
20.    Balance  of  profit  how  to  be  utilised.
21.    Interim  provisions  for  management  of  Indian  Insurance  coi*-
          panies.
22.    Power  of  Central  Government  to  transfer  employees.
23.    Power  of  Central  Government  to  issue  directions.
                            CHAPTER  VII
                            MISCELLANEOUS
24.    Acquiring  companies  to  have  the  exclusive  privilege  ot  carry-
          ing  on  general  insurance  business.
25.    Properties  in  India  not  to  be  insured  with  foreign  insurers
          except  with  permission  of  Central  Government.
26.    Acquiring  companies  and  income-tax.
27.    Power  to  reduce  amounts  of  insurance  in  certain  cases.
28.    Right  of  acquiring  company  to  seek  relief  in  respect  of  certain
          transactions.
29.    Duty  to  deliver  possession  of  property  and  documents  relating
          thereto.
30.    Penalty  for  withholding  property,  etc.
31.    Officers  of  Corporation  or  of  acquiring  companies  to  be  puDiic
          servants.
32.    Indemnity.
33.    Dissolution  of  Corporation  and  acquiring  companies.
34.    Reference  to  existing  insurer  in  other  laws.
35.    Application  of  Insurance  Act
36.    Exemptions.
37.    Vacancies,  etc.,  not  to  invalidate  proceedings.
38.    Protection  of  action  taken  in  good  faith.
39.    Power  to  make  rules.
40.    Omission  of  section  14  of  Act  17  of  1971.
THE   SCHEDULE.

Bill No. 60-B of 1972.

£HE GENERAL INSURANCE; BUSINESS (NATIONALI-

g SATION) BILL, 1972

( As REPORTED BY THE JOINT COMMITTEE)

[W&tf&s underlined or side-lined indicate the amendments suggested by

the Committee;

A

BILL

to provide for the acquisition and transfer of shares of Indian insurance

companies and undertakings of other existing insurers in order to

serve better the needs of the economy by securing the development

of general insurance business in the best interests of the community

and to ensure that the operation of the economic system does not

result in the concentration of wealth to the common detriment, for

the regulation and control of such business and for matters connected

therewith or incidental thereto.

BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows: —

CHAPTER I

PHEUMTNARY

1, This Act may be called the General Insurance Business ~

Snort tttw.

„ , ,. . v • J. * rifro (Nationalisation) Act, 1972.

2. It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principles specified in clause (c) of article 39 of the Constitution.

Decla-

ration *S

to tke po-

licy of th"

State.

Explanation.—In this section, "State" has the same meaning as in article 12 of the Constitution.

3. In this Act, unless the context otherwise requires,—

Deflsl.

tions.

(a) "acquiring company" means any Indian insurance company and, where a scheme has been framed involving the merger of one Indian insurance company in another or the amalgamation "1 two or more such companies, means the Indian insurance company In which any other company has been merged or the company which has been formed as a result of the amalgamation;

(b) "appointed day" means such day, not being a day later than the 2nd day of January, 1973, as the Central Government may, by notification, appoint;

(c) "Companies Act" means the Companies Act, 1956;

1 of 1891.

(d) "Corporation" means the General Insurance Corporation of India formed under section 9;

17 of 1971.

(e) "existing insurer" means every insurer the management of whose undertaking has vested in the Central Government under section 3 of the General Insurance (Emergency Provisions) Act, 1971, and includes the undertaking of the Life Insurance Corporation in so far as it relates to the general insurance business carried on by it;

(f) "foreign insurer" means an existing insurer incorporated under the law of any country outside India;

(g) "general insurance business" means fire, marine or rfllu- cellaneous insurance business, whether carried on singly or in com- bination with one or more of them, but does not include capital redemption business and annuity certain business;

(h) "Government company" means a Government company as denned in section 617 of the Companies Act;

(i) "Indian insurance company" means an existing insurer having a share capital who is a company within the meaning of the Companies Act;

4 of 1938.

0) "Insurance Act" means the Insurance Act, 1938;

31 of 1998.

(fc) "Life Insurance Corporation" means the Life Insurance Corporation of India established under the Life Insurance Corpora- tion Act, 1956;

(I) "notification" means a notification published in the Official Gazette;

(m) "prescribed" means prescribed by rules made under this Act;

(n) "Schedule" means the Schedule to this Act;

(o) "scheme" means the scheme framed under section IB;

(p) words and expressions used in this Act but not defined herein and defined in the Insurance Act, shall have the meanings respectively assigned to them in that Act;

(q) words and expressions used in this Act but not defined herein or in the Insurance Act and defined in the Companies Act, shall have the meanings respectively assigned to them in the Com- panies Act.

CHAPTER II

TRANSFER TO PUBLIC OWNERSHIP OF GENERAL INSURANCE BUSINESS

4. (1) On the appointed day all the shares in the capital of every Indian insurance company shall, by virtue of this Act, stand transferred to and vested in the Central Government free of all trusts, liabilities and encumbrances affecting them

Transfer ol shares of Indian in- surance companies

(2) Out of the shares so transferred and vested, the Central Govern- ment shall, immediately thereafter, by notification, provide for the transfer of not less than ten shares of every such company to such per- sons as may be specified in the notification to enable the Indian insurance company to function a • a Government company.

(3) Every notification made under sub-section (2) shall specify the names and description of the persons to whom the shares are transferred and the particulars of the shares which are transferred to each such person.

(4) A copy of every notification made under sub-section (2) shall, a,s soon as may be after it is made, be sent by the Central Government to the concerned Indian insurance company, who shall, on receipt of such copy, and notwithstanding anything contained in the Companies Act or in its articles of association, forthwith rectify its register of members by including therein the persons mentioned in the notification as the holders of the shares specified therein.

(5) For the removal of doubts it is hereby declared that the transfer and vesting of shares effected under sub-section (/) shall not be deemed to affect any right of the Indian insurance company subsisting imme- diately before the appointed day against any shareholder to recover from him any sum of money on the ground that that shareholder has not paid or credited to the insurer the whole or any part of the value of the shares held by him or on any other ground whatsoever.

Transfei of undertak- ing? of o her existing insurers. 5- (/) On the appointed day, the undertaking of every existing insurer who is not an Indian insurance company shall stand transferred to and vested in the Central Government and the Central Government shall immediately thereafter provide, by notification, for the transfer to and vesting in such Indian insurance company, as it may specify in the notification, of that undertaking.

(2) Any notification made under sub-section (/) may provide thai any of the undertakings aforesaid may be transferred to and vested ir, more than one Indian insurance company in such manner and subject tc such conditions as may be specified in the notification,

Effect of transfer of wndertak-

' ings.

1 6. (/) The undertaking of every such exiting insurer as is referrec to in section 5 shall be deemed to include all assets, rights, powers authorities and privileges and all property, movable and immovable cash balances, reserve funds, investments and all other rights and inte rests in, or arising out of, such property as were immediately before th<

appointed day in the ownership, possession, power or control of such existing insurer in relation to the undertaking, whether within or without India, and all books of accounts, registers, records and all other documents of whatever nature relating thereto, and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the existing insurer in relation to the undertaking.

(2) Unless otherwise expressly provided by this Act, all deeds, bonds, agreements, powers of attorney, grants of legal representation and other Instruments of whatever nature subsisting or having effect immediately before the appointed day and to which any such insurer as is referred to in section 5 is a party or which are in favour of such existing Insurer fihall be of as full force and effect against or in favour of the Indian in- surance company in which the undertaking or the part to which the instrument relates has vested and may be enforced or acted upon as fully and effectually as if, in the place of the existing insurer referred to in section 5, the Indian insurance company in which the undertaking or any part thereof has vested had been a party thereto, or as if they had been issued in its favour.

(3) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any business of the undertaking which has been transferred under section 5 is pending by or against any such existing insurer as is referred to in that section, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer of the undertaking or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Indian insurance company in which the under- taking or the part to which the proceeding relates has vested-

(4) For the removal of doubts it is hereby declared that in the case of a foreign insurer or, as the case may be, the Life Insurance Corporation, the provisions of section 5 and of the preceding sub-sections shall only apply to the extent to which any property appertains, in the former case, to the general insurance business carried on in India and, in the latter case, to the general insurance business carried on, whether within or without India, and to rights and powers acquired, and to debts, liabilities and obligations incurred and to contracts, agreements and other instru- ments made by the foreign insurer or the Life Insurance Corporation, as the case may be, for the purpose of such general insurance business and to legal proceedings relating to those purposes, and the said provisions shall be construed accordingly.

(5) If any question arises as to whether any property appertains to any such general insurance business as is referred to in this section or whether any rights, powers, liabilities or obligations were acquired or incurred or any contract, agreement or other instrument was made by the foreign insurer or the Life Insurance Corporation, as the case may be, for the purposes of any such business or whether any documents re- late to those purposes, the question shall be referred to the Central Government which shall, after giving an opportunity of being heard to the persons interested in the matter, decide it in such manner as it thinks fit.

Transfer of service of existing employees in certain cases.

7. (1) Every whole-time officer or other employee of an existing insurer other than an Indian insurance company who was employed bv that insurer wholly or mainly in connection with his general insurance business immediately before the appointed day shall, on the appointed day, become an officer or other employee, as the case may be, of the Indian insurance company in which the undertaking of that insurer or that part of the undertaking to which the service of the officer or other employee relates has vested, and shall hold hiH office or service under the Indian insurance company on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if there had been no such vesting, and shall continue to do so unless and until hig employment in the Indian insur- ance company in which the undertaking or part has vested is terminated or until his remuneration, terms and conditions are duly altered by that Indian insurance company:

Provided that nothing in this sub-section shall apply to any such officer or other employee who has given, in writing, notice to the Central Gov- ernment or to any person nominated in this behalf by that Government before the appointed day intimating his intention of not becoming an officer or employee of the Indian insurance company in whom the under- taking or part thereof to which his service relates has vested.

(2) If any question arises as to whether any person was a whole- time officer or employee, or as to whether any officer or employee, was employed wholly or mainly in connection with the general insurance busine'ss of the existing insurer referred to in sub-section (1), *** imme- diately before the appointed day, the question shall be referred within a period of two, years from the appointed day and not thereafter, to the Central Government which shall, after giving an opportunity of being heard to the person concerned in the matter, decide it in such manner as it thinks fit and such decision shall be final.

Hot J947

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 or in any other law for the time being in force, the tran.sfer oi' the services of any officer or other employee """* under sub-section (1) shall not entitle any such officer or other employee to any compensation under that Act or such other law, and no such claim shall be entertained by any court, tribunal or other authority.

Provident, super- annuation welfare md othei funds.

8. (1) Where an existing insurer has established a provident, super- annuation, welfare or any other fund for the benefit of his employees and constituted a trust in respect thereof (hereafter in this section referred to as an existing trust), the moneys standing to the credit of such fund on the appointed day, together with any other assets belonging to such fund, shall stand transferred to and vested in the Indian insurance com- pany on the appointed day free from any such trust. * * * **

(2) Where all the employees of the Life Insurance Corporation or any other existing insurer do not become employees of an Indian insur- ance company, the monies and other assets belonging to any such fund as is referred to in sub-section (2), shall be apportioned between the trustees of the fund and the Indian insurance company in the prescribed manner; and in case of any dispute about such apportionment the deci- sion G[ the Central Government thereon shall be final.

\o) wnere me u n a e r i a s mg 01 an existing insurer nas vestea in more

than one Indian insurance company, the Central Government may, by order, provide for the apportionment among such Indian insurance com- panies of monies and other assets belonging to any existing trust relating to that undertaking in such manner as in its opinion may be appropriate.

(4) The Indian insurance company shall as soon as may be after the appointed day constitute in respect of the moneys and other assets which are transferred to and vested in it under this section one or more trusts having objects as similar to the objects of the existing trusts as in the circumstances may be practicable.

(5) Where all the money;] anrl other assets belonging to an existing trust are transferred to and vested in an Indian insurance company under this section, the trustees of such trust shall, as from the appointed day, stand discharged from the trust, except as respects things done or omit- ted to be done before the appointed day.

CHAPTER III

GENERAL INSURANCE CORPORATION or INDIA

Formalior 9. (1) As soon as may be alter the commencement of this Act, the Central Government shall form a Government company in accordance with the provisions o£ the Companies Act, to be known as the General Insurance Corporation of India far the purpose of superintending, con- trolling and carrying on the business of general insurance.

of General Insurance Corpora- tion of India.

(2) The authorised capital of the Corporation shall be rupees seventy- five crores, divided into seventy-five lakhs fully paid-up shares of one hundred rupees each, out of which rupees five crores shall be the initial subscribed capital of the Corporation.

1 of 1958 (3) Notwithstanding anything contained in the Companies Act, 1956,

it shall not be necessary to add the word "Limited" as the last word of the name of the Corporation.

Transfer to Corpo- ration of ahBi-es vested in Central Govern- ment.

10. All the shares in the capital of every Indian insurance company which stand transferred to and vested in the Central Government by virtue of section 4 [with the exception of the shares transferred to any person under sub-section (2) of that section] shall, immediately after such vesting, stand transferred to and vested in the Corporation and every Indian insurance company shall forthwith give effect to such transfer of shares and rectify its register of members by including therein the Cor- poration as the holder of such shares.

CHAPTER IV

AMOUNTS TO BE TAID FOR ACQUISITIONS

11. (1) For the transfer of the shares of each Indian insurance com-

pany to, and vesting in, the Central Government, under section 4, there shall be paid by the Central Government to the Corporation, for distri- bution to the shareholders of each such company, the amount specified against such company in the corresponding entry under column (3) of Part A of the Schedule.

Amounts ty be paid for tt-ans- TCT and vesting of shares or undertak- ings.

(2) For the transfer to, and vesting in, the Central Government, under section 5, of the undertaking of each existing insurer, who is not an Indian insurance company, there shall be paid by the Central Gov- ernment to the Corporation, for payment to each such existing insurer,

the amount specified against such insurer in the corresponding entry under column (3) of Part B of the Schedule.

12. (2) The total amount paid by the Central Government under section 11 shall be treated as additional contribution to the subscribed capital of the corporation and such additional subscribed capital shall stand allotted to, and vested in, the Central Government.

Disburse- ment of amounts by Corpora- tion.

(2) The Corporation shall distribute the amount paid to it under section 11, to the shareholders of each Indian insurance company and to each exist- ing insurer, who is not an Indian insurance company, in accordance with their rights and interests, and, if there is any doubt or dispute as to the right, or extent of the right, of any person to receive the whole or any part of such amount, refer such doubt or dispute to the Central Govern- ment for determination and thereafter act in accordance with the deter- mination made by that Government.

(3) Save as otherwise provided in sub-section (2), the amount refer- red to in section 11 shall be given in accordance with the provisions of section 13, section 14 or section 15, as the case may be.

13. (1) Where the amount referred to in section 11 is to be given—

Mode of payment.

(a) to the members of an Indian insurance company, the amount due to each such member shall be paid in full, where it does not exceed twenty-five thousand rupees, and where it exceeds twenty-five thousand rupees, each such member shall be paid twenty-five thousand rupees and the balance of the amount due to such member shall be paid to him in three equal annual instalments, the first of which shall fall due on the appointed day;

(h) to a foreign insurer, it shall be given to him in cash within three months from the appointed day;

(c) to the Life Insurance Corporation, it shall be given to it in three equal annual instalments, the first of which shall fall due on the appointed day;

(d) to an existing insurer who is a co-operative society, it shall be distributed as soon as may be after the appointed day in accord- ance with the rules of the society which will apply in case of disso- lution of the society,

(e) to an existing insurer not falling within any of the fore- going provisions, it shall be apportioned by the acquiring company among the individual policy-holders of the insurer whose policies with that insurer were in force on the appointed day and were com- prised in the undertaking of such insurer in proportion to the pre- miums paid by the policy-holders under such policies and every such payment shall be made either—

(i) in cash, to bo sent by postal money order, or

(ii) at the option of the policy-holder, as a deduction in the premium due at the time of the renewal of the policy and such option shall be exercised by the policy-holder before the expiry of three months from the appointed day (or within such further time not exceeding three months as the Central Government may, on the application of the policy-holder, allow); and the

option so exercised shall be final and shall not be altered or rescinded after it has been exercised:

Provided that if any policy-holder fails to exercise his option within the time allowed, he shall be deemed to have exercised his option in favour of payment in cash by postal money order.

(2) Where any amount is payable whether in instalments or other- wise under the provisions of this section, the unpaid amount, where its payment has become due, shall carry interest at the rate of four per cent, per annum from the appointed day.

Aniouut oayable to sharehol- ders may be paid to named Dersons instead in certain cases.

14. (1) Notwithstanding anything contained elsewhere in this Act, if a majority in number of the persons, who, immediately before the appointed day, were registered in the books of an Indian insurance com- pany as the members thereof, and representing two-thirds in value of the amount payable to the Indian insurance company, agree either in person or by proxy at a meeting specially convened for the purpose that the amount so payable instead of being distributed among the members, shall be given to any such person or body of persons as the members may nominate either at that meeting or subsequently for the purpose of carrying on any business, and the Central Government is satisfied that due provision has been or will be made for the payment of the value of their respective shares to persons who have dissented from the resolu- tion, the amount may be given to the person or body of persons so nomi- nated in such manner and subject to such conditions as the Central Gov- ernment may think fit.

(2) No resolution passed at any such meeting as is referred to in sub- section (1) held after the *** appointed day shall have any effect unless the meeting has been convened after obtaining the approval of the Central Government.

15. Where a claim to the amount payable under section 11 is made by two or more persons adversely to one another, the corporation may cause the amount to be deposited in any civil court having jurisdiction in that behalf and the court shall decide as to whom the payment shall be made.

."•aymenl into court in case of rival claims

CHAPTER V

SCHEME FOR REORGANISATION OF GENERAL INSURANCE BUSINESS

16. (1) If the Central Government is of opinion that for the more efficient carrying on of general insurance business it is necessary so to do, it may, by notification, frame one or more schemes providing for all or any of the following matters:—

Schemes for mer- gers of companies etc.

(a) the merger in one Indian insurance company of any other Indian insurance company, or the formation of a new company by the amalgamation of two or more. Indian insurance companies.

(h) the transfer to and vesting in the acquiring company or 1>IP undertaking (including all its business, properties, assets and liabilities) of any Indian insurance company which ceases to exist by reason of the scheme;

(c) the constitution, name and registered office and the capital structure of the acquiring company and the i,"Fue and allotment of

shares;

(d) the constitution of a board of management by whatever name called for the management of the acquiring company;

(e) the alteration of the memorandum and articles of association of the acquiring company for such purposes as may be necessary to give effect to the scheme;

(/) the continuance in the acquiring company of the services of all officers and other employees of the Indian insurance company which has ceased to exist by reason of the scheme, on the same terms and conditions which they were getting or, as the case may be, by which they were governed immediately before the com- mencement of the scheme;

(g) the rationalisation or revision of pay scales and other terms and conditions of service of *** officers and other employees wherever necessary;

(h) the transfer to the acquiring company of the provident, superannuation, welfare and other funds relating to the officers and other employees of the Indian insurance company which has ceased to exist by reason of the scheme;

(i) the continuance by or against the acquiring company of legal proceedings pending by or against any Indian insurance com- pany which has ceased to exist by reason of the, scheme, and the initiation of such legal proceedings, civil or criminal, as the Indian insurance company might have initiated if it had not ceased to exist;

(j) such incidental, consequential and supplemental matters a3 are necessary to give full effect to the scheme.

(2) In framing schemes under sub-section (1), the object of the Cen- tral Government shall be to ensure that ultimately there are only four companies (excluding the Corporation) in existence and that they are so situate as to render their combined services effective in all parts of India.

(3) Where a scheme under sub-section (1) provides for the transfer of any property or liabilities, then, by virtue of the scheme, the property shall stand transferred to and vested in, and those liabilities shall be transferred to and become the liabilities of, the acquiring company.

(4) If the rationalisation or revision of any pay scale or other terms and conditions of service under any scheme is not acceptable to any officer or other employee, the acquiring company may terminate his employment by giving him compensation equivalent to three months remuneration, unless the contract of service with such employee pro- vides for a shorter notice of termination.

Explanation.—The compensation payable to an officer or other em- ployee under this sub-section shall be in addition to, and shall not affect, any pension, gratuity, provident fund or other benefit to which the em- ployee may be entitled under his contract of service.

u of xwrr.

(5) Notwithstanding anything contained jn the Industrial Disputes Act, 1947 or in any other law for the time being in force, the transfer of the services of any officer or other employee of an Indian insurance

company to the acquiring company shall not entitle any such officer or other employee to any compensation under that Act or other law, and no such claim shall be entertained by any court, tribunal or other authority.

(6) The Central Government may, by notification, add to, amend or vary any scheme framed under this section.

(7) The provisions of this section and of any scheme framed under it shall have effect notwithstanding anything to the contrary contained in any other law or any agreement, award or other instrument for the time being in force.

17. A copy of every scheme and every amendment thereto framed under section 16 shall be laid, as soon as may be after it is made, before each House of Parliament.

Schemes to be laid be- fore Parlia- ment.

CHAPTER VI

FUNCTIONS OF CORPORATION AND ACQUIRING COMPANIES AND THEIR

MANAGEMENT

18. (1) The functions of the Corporation shall include—

Function* of Corpo- ration.

(a) the carrying on of any part of the general insurance busi- ness, if it thinks it desirable to do so;

(b) aiding, assisting and advising the acquiring companies in the matter of setting up of standards of conduct and sound practice in general insurance business and in the matter of rendering efficient service to holders of policies of general insurance;

(c) advising the acquiring companies in the matter of control- ling their expenses including the payment of commission and other expenses;

(d) advising the acquiring companies in the matter of the in- vestment of their funds;

(e) issuing directions to acquiring companies i:" * * in relation to the conduct of general insurance business.

(2) In issuing any directions under sub-section (/), the Corporation shall keep in mind the desirability of encouraging competition amongst the acquiring companies as far as possible in order to render their ser- vices more efficient.

Functions of acquir- ing com- panies.

19. (1) Subject to the rules, if any, made by the Central Government in this behalf and to its memorandum and articles of association, it shall be the duty of every acquiring company to carry on general insurance business.

(£) Each acquiring company shall so function under this Act as to secure that general insurance business is developed to the best advan- tage of the community.

(3) In the discharge of any of its functions, each acquiring company shall act so far as may be on business principles and where any direc- tions have been issued by the Corporation, shall be guided by such directions.

(4) For the removal of doubt it is hereby declared that the Cor- poration and any acquiring company may, subject to the rules, if any, made by the Central Government in this behalf, enter into such con- tracts of reinsurance or reinsurance treaties as it may think fit for the protection of its interests-

Balance of profit how to be uti- lised.

20. (2) Alter making provision for bad and doubtful debts, depre- ciation in assets, provident, superannuation, welfare and other funds, debts due to Government and all other matters for which provision is necessary under any law or which are usually provided for by insurance companies, every acquiring company shall distribute the balance of profit as dividends.

(2) Any profit made by the Corporation and any sums received by the Corporation by way of dividends or otherwise shall be dealt with by it in such manner as may be prescribed.

21. (1) Notwithstanding anything contained in the Companies Act, or Interim provisions for mana- gement of Indian in- surance companies

17 of 1971

in the memorandum and articles of association of any Indian insurance company, on and from the appointed day and until a new board of direc- tors of the Indian insurance company is duly constituted, the manage- ment of the company shall continue to vest in the Custodian in charge of the management of the undertaking of that company immediately before the appointed day by virtue of the provisions contained in the , General Insurance (Emergency Provisions) Act, 1971, and the Custo- dian shall be entitled, subject to such directions as the Central Govern- ment may issue in this behalf, to exercise all the powers and do all acts and things as may be exercised or done by the company or by its board of directors.

(2) Nothing contained in sub-section (1) shall be deemed to prevent the Central Government from appointing any other person to take charge cf the management of the undertaking of any Indian insurance company during the period referred to in that sub-section if for any reason it becomes necessary so to do, and any person so appointed may exercise all the powers and do all acts and things which a Custodian may exercise or do under sub-section (2).

(3) The Custodian referred to in sub-section (1) and the person appointed under sub-section (2) shm.!l ue entitled to such salaries and other allowances as the Central Government may specify in this behalf and shall hold office during the pleasure of the Central Government.

Power of Central Govern- ment to transfer employees.

22. The Central Government may at any time transfer any officer or employee from an acquiring company or the Corporation to any other acquiring company or the Corporation, as the case may be, and the officer or employee so transferred, shall continue to have the same terms and conditions of service as were applicable to him immediately before such transfer.

23. The Corporation and every acquiring company shall, in the dis- charge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government may give.

Power ol Central Govern- ment to issue directions

CHAPTER VII

MISCELLANEOUS

24. (1) Except to the extent expressly provided in this Act, on and from the appointed day, the Corporation and the acquiring companies shall have the exclusive privilege of carrying on general insurance busi- ness in India.

Acquiring con Lpaivies to have the exclusive pri vilerfe of ;arry. infl¹ on gei eral in- sur nnce business.

(2) Subject to the provisions of section 36, any certificate of regiS' tration granted under the Insurance Act to any insurer other than an insurer referred to in sub-section (1) shall, on and from the appointed day, cease to have effect:

Provided that nothing in this sub-section shall apply to the carrying on by the Life Insurance Corporation of life insurance business and capital redemption and annuity certain business.

25. (1) No person shall take out or renew any policy of insurance in respect of any property * '" * in India or any ship or other vessel or aircraft registered in India with an insurer whose principal place of business is outside India save with the prior permission of the Central

' Government.

pose of the general insurance business of the insurer or was made with an unreasonable lack of prudence on the part of the insurer, regard being had in either case to the circumstances at the time, the acquiring company may apply for relief to the court in respect of such transaction, and all parties to the transaction shall, unless the court otherwise directs, be made parties to the application.

(2) The court may make such order against any of the parties to the application as it thinks just having regard to the extent to which those parties were respectively responsible for the transaction or benefited from it and all the circumstances of the case.

(3) Where an application is made to the court under this section in respect of any transaction and the application is determined in favour of the acquiring company, the court shall have exclusive jurisdiction to determine any claim outstanding in respect of the transaction. * * * * *

Duty to deliver 29. (1) Where any property appertaining to an existing insurer has been transferred to and vested in an Indian insurance company under section 5,—

possession of property and docu- ments re- (a) every person in whose possession, custody or control any such property may be, shall deliver the property to the Indian insurance company forthwith,

lating thereto (b) any person who immediately before such vesting has in his possession, custody or control any books, documents or other papers relating to an existing insurer shall be liable to account for the said books, documents and papers to the Indian insurance company, and shall deliver them to that company or to such person as that com- pany may direct.

(2) In particular, all the assets of an existing insurer appertaining to the undertaking held in deposit by the Reserve Bank of India under the Insurance Act or by trustees in trust shall be delivered to the Indian insurance company.

(3) Without prejudice to the other provisions contained in this sec- tion, it shall be lawful for each Indian insurance company to take all necessary steps for taking possession of all properties which have been transferred to and vested in it under this Act.

Penalty for with, holding property, etc. 30. If any person wilfully withholds or fails to deliver to an Indian insurance company as required by section 29 any property or any books, documents or other papers which may be in his possession or unlawfully retains possession of any property of an existing insurer which has been transferred to and vested in an Indian insurance company under section 5 or wilfully applies any such property to purposes other than those expressed in or authorised by this Act, he shall, on the complaint of the Indian insurance company, be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both.

31. Every officer or other employee of the Corporation or of an ac-

quiring company shall be deemed to be a public servant for the purposes

of Chapter IX of the Indian Penal Code.

45 of 1860.

Officers and em- ployees of Corpora- tion or of acquiring companies to be public

wvants.

Indem- nity.

32. Every officers of the Central Government and every officer or other employee of the Corporation and of any acquiring company shall be indemnified by the Central Government or the Corporation or the acquiring company, as the case may be, against all losses and expenses incurred by him in, or in relation to, the discharge of his duties under this Act except such as have been caused by his own wilful act or default.

33. No provision of law relating to the winding up of companies shall apply to the Corporation or to an acquiring company, and neither the Corporation nor any such company shall be placed in liquidation save by order of the Central Government and in such manner as it may direct.

Dissolution of Corpo- ration and acquiring companies.

Reference 34- Any reference to an existing insurer in any law other than this Act or any contract or other instrument shall, in so far as it relates to an acquiring company, be construed as a reference to that company.

to existing Insurer in other laws

.Applica- tion of Insurance Act.

35. Subject to such exceptions, restrictions and limitations, if any, as the Central Government may, by notification, specify in this behalf, the Insurance Act shall apply to or in relation to the Corporation and every acquiring company as if the Corporation or the acquiring company, as the case may be, were an insurer carrying on general insurance busi- ness within the meaning of that Act.

36. (2) Nothing contained in this Act shall apply in relation to—

Sxemp* titfOB-

(a) any general insurance business carried on by a State Gov- ernment, to the extent to which such insurance relates to properties belonging to it or undertakings owned wholly or mainly by the State Government; or to properties belonging to¹ semi-government bodies, or any Board or body corporate established by the State Government under any statute or any industrial or commercial undertaking in which the State Government has substantial finan- cial interest, whether as shareholder, lender or guarantor;

(b) any general insurance business not falling within clause (a) which has been carried on by a State Government before the commencement of this Act, to the extent to which it is necessary to allow such business to run off:

Provided that nothing contained in this clause shall be deemed to authorise the State Government to issue any new policies or renew any existing policies;

(r) any insurer whose business is being voluntarily wound up or is being wound up by a court;

(d) the insurance business carried on by the Calcutta Hospital and Nursing Home Benefits Association Limited;

{

47 of 1961.

(/) any scheme in existence immediately before the 14th day of May, 1971 or any scheme framed after the said day with the

approval of the Central Government for the insurance of crops or of cattle or of flood ri-aks or of war or emergency risks,

(2) If the Central Government is satisfied that an insurer, whether established before or after the appointed day, carries on only such general insurance business as is not carried on ordinarily by insurers, it may, by notillcation, direct that nothing contained in this Act shall apply to such insurer.

37. No act or proceeding of the Corporation or of an acquiring company 5hall be called in question merely on the ground of the existence of any vacancy in, or defect in the constitution of, the Corporation or the com- pany.

28. No suit, prosecution or other legal proceeding shall lie against any officer of the Central Government or officer or other employee of the Corporation or of the acquiring company for anything which is in good faith done or intended to be done under this Act.

Vacan- cies, etc., not to invali- date pro. ceedings. Protection of action taken in good faith.

39. (1) The Central Government may, by notification, make rules to carry out the provisions of this Act.

Power to make rules.

(2) In particular, and without prejudice to the generality of the foregoing power, rules made under this section may provide for—

* * * * *

(a) the manner in which the profits, if any, and other moneys received by the Corporation may be dealt with;

(b) the conditions, if any, subject to which the Corporation and the acquiring companies shall carry on general insurance business;

(c) the terms and conditions subject to which any reinsurance contracts or treaties may be entered into;

(d) the form and manner in which any notice or application may be given or made to the Central Government;

(e) the reports which may be called for by the Central Gov- ernment from the Corporation and the acquiring companies;

(f) any other matter which is required to be, or may be, pres- cribed.

(3) Every rule made under this section and every notification issued under section 35 shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more succes- sive sessions, and if, before the expiry of the session immediately fol- lowing the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or notification or both Houses- agree that the rule or notification should not be made, the rule or noti- fication shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.

40. Section 14 of the General Insurance (Emergency Provisions) Act, 1971, is omitted.

Omission

of sec-

tion 14

of Act

17 of

1971.

THE SCHEDULE

(See section n)

Amounts to be paid

P A R T -A

S e r i al N a me of I n d i an i n s u r a n ce c o m p a ny

Amount to be paid

N u m b er

( i)

(3)

Rs.

i A ll I n d ia G e n e r al I n s u r a n ce C o m p a ny L t d.

10,00,000

2 A n a nd I n s u r a n ce C o m p a ny L t d. p r e f e r e n ce

S h a r es

3,50,000

E q u i ty

S h a r es B h a b ha M a r i ne I n s u r a n ce C o m p a ny L t d. . . ..

2,00,000 54,448

B h a r at G e n e r al R e i n s u r a n ce L t d. P r e f e r e n ce

3 4

S h a r es

8,18,000

O r d i n a ry S h a r es

B r i t i sh I n d ia G e n e r al I n s u r a n ce C o m p a ny L t d. .

13.49,844 37.5°.ooo

7 AQ AA1.

5 6 C a l c u t ta I n s u r a n ce L i m i t ed . . . . ..

C e n t r al M e r c a n t i le A s s u r a n ce C o m p a ny L t d.

C l i vc I n s u r a n ce C o m p a ny L t d. . . . ..

7 8

3.38,499 {26,12,600 1,000

9

IO

C o m m o n w e a l th A s s u r a n ce C o m p a ny L t d. C o n c o rd of I n d ia I n s u r a n ce C o m p a ny L t d.

II D e v k a r an N a n j ee I n s u r a n ce C o m p a ny L t d. G e n e r al A s s u r a n ce Society L t d,

.

39.77.1 °° 16,80,03= 8 06 000

12 in

87 d.8 000

H e r c u l es I n s u r a n ce C o m p a ny L t d, . . . .. H i n d u s t h an G e n e r al I n s u r a n ce Society L t d. . •

H i n d u s t h an I d e al I n s u r a n ce C o m p a ny L t d.

15,52.500 25,20,605

H 15 16 H o w r ah I n s u r a n ce C o m p a ny L t d. . . . .. H u k u m c h a nd I n s u r a n ce C o m p a ny L td

975 10,00,000

17 18 I n d ia R e i n s u r a n ce C o r p o r a t i on L t d, . . ..

I n d i an G u a r a n t ee & G e n e r al I n s u r a n ce C o m p a ny L t d.

19

2,05,02,200 1,95.69,760

20

21

I n d i an M e r c a n t i le I n s u r a n ce C o m p a ny L t d. I n d i an M e r c h a n t s' M a r i ne I n s u r a n ce C o m p a ny L t d. .

22 I n d i an O c e an I n s u r a n ce C o m p a ny L t d. . . ..

23 I n d i an T r a de & G e n e r al I n s u r a n ce C o m p a ny L t d.

24 J a l a n a th I n s u r a n ce L t d. . . . . .. J u p i t er G e n e r al I n s u r a n ce C o m p a ny L t d, . . ..

25

26 K a l y an M a r i ne I n s u r a n ce C o m p a ny L t d. . . ..

27 28

L i b e r ty I n s u r a n ce C o m p a ny L t d. . . . .. M a d r as M o t or a nd G e n e r al I n s u r a n ce C o m p a ny L t d.

50,33.195 2,28,753 1,00,000 61,21,200 10,42,955 26,24,445 i,79,88o 1,000 i.77,69.6oo

29 M a d u ra I n s u r a n ce C o m p a ny L t d. P r e f e r e n ce

7 00

' 15.83,900

S h a r es O r d i n a ry S h a r es D e f e r r ed Shares

12,500

Serial N a me of Indian insurance company

N u m b er

A m o u nt to be paid

( 2)

( 1)

(3)

Rs.

M a r i ne & General Insurance Company L t d.

8,95,300 30

M o t h er India F i re & General Insurance Company L t d.

7.44J345 3i 32 M o t or Owners' Insurance Company L t d. . . ..

Naranji Bhanabhai & Company L td

i><55>575 49,200 33

N a r h a ri M a r i ne Insurance Company L t d. . . ..

2,36,400 34

60,58,150 National Insurance Company L t d. . . . ..

35

N e p t u ne Assurance Company L t d, . . . ..

10,00,000 36

N ew Great Insurance Company of India L t d.

43,50,000 37 38 N ew India Assurance Company Limited . . ..

8,20,37,678

N ew Merchants Insurance Company L t d.

68,912 39 40

1,21,110 N ew Premier Insurance Company L t d. .

N o r t h e rn India General Insurance Company L t d,

998 41 42 Oriental F i re & General Insurance Company L t d.

2,43,98,000

Pandyan Insurance Company L t d. . . . ..

90,00,000 43

Pioneer F i re & General Insurance Company L t d.

11,82,610 44

Porbandar Insurance Company L t d. . . . . .

59,194 45 46 prachj Insurance Company L t d. .

R u by General Insurance Company L t d. .

21,375 1,38,74,000 47 48 Shree Mahasagar Vima Company L t d. .

1,18,252

60,63,000 South India Insurance Company L t d. . . ..

49

Sterling General Insurance Company L t d. preference

50

23,000

Shares

Ordinary

16,08,139

Shares

T r i t on Insurance Company L t d. . . . ..

47,07,180 5¹

United India Fire & General Insurance Company L t d,

52

Universal Fire & General Insurance Company L t d.

21,39,991 24,71,618 53

Vanguard Insurance Company L t d. .

896 54

Vulcan Insurance Company L t d. .

32,49,617 55

PART-B

Amount to be paid

al Name of insurer her

Seri Num

( 2)

{{^{{FOOTNOTE (1)}}}}

(3)

Rs.

2 3

4 5 6

S c ri N ut

a' N a me of i n s u r er n b cr

A m o u nt to be p a id

( 2)

CO

(3)

Rs.

9 IO

11

12

13 14 15 16

17 18

36,65,000 3,30,000 64,85,000 22,67,000 i,000 8T,OOO 6,04,000 85,20,000 37,12,000 1,000

19

20

21

22

23 24

3.81,000 19,98,000 42,13,000 2,96,000 3,73,000 5,28,000 8,23,000 12,30,000 40,000 47,70,000 1,000

25 26 27 28 29 30

A l l i a n ce A s s u r a n ce C o m p a ny L t d, . . . .. A m e r i c an I n s u r a n ce C o m p a ny . . . . .. A t l as A s s u r a n ce C o m p a ny L t d .. . . . .. B a l o i so I n s u r a n ce C o m p a ny L i m i t ed . . .. B r i t i sh A v i a t i on l r s u r a r . ee C o m p a ny L t d. C a l e d o n i an I n s u r a n ce C o m p a ny . . . .. C e n t u ry I n s u r a n ce C o m p a ny L t d. . . . .. C o m m e r c i al U n i on A s s u r a n ce C o m p a ny L t d. E a g le S t ar I n s u r a n ce C o m p a ny L t d. . . .. G e r l i ng G l o b al R e i n s u r a n ce C o m p a ny L t d. G r e at A m e r i c an I r s i i r & r ce C o r n p t i ry . . .. G u a r d i an A s s u r a n ce C o m p a ny L t d. , H a n o v er I n s u r a n ce C o m p a ny . . . . .. H a r t f o rd F i re I n s u r a n ce C o m p a ny . . . .. H o me I n s u r a n ce C o m p a ny . . . . .. L e g al & G e n e r al A s s u r a n ce S o c i e ty L t d. . . .. L i v e r p o ol a nd L o n do i a nd G l o be I n s u r a n ce C o m p a ny L t d. L o n d on A s s u r a n ce . . . , . L o n d on G u a r a n t ee & A c c i d e nt C o m p a ny L t d. L o n d on & L a n c a s h i re I n s u r a n ce C o m p a ny L t d. . L ' U n i on F i r e, A c c i d e nt a nd G e n e r al I n s u r a n ce C o m p a ny L t d. N a t i o n al E m p l o v e r s' M u t u al G e n e r al I n s u r a n ce A s s o c i a t i on

L t d. . "

3,17.003 1,000

19,08,000 10,84,000 31,43,000 2,63,000 1,000 10,31,000 49,62,000

3i 32 33 34 35 36 37 38 39 40

73,28 000 4^j!r onn

'. ,nno

        N a t i o n al T r s u r anee C o m p a -y   of  N ew   Z e a l a nd  L t d.
         N ew   H a m p s h i re   I n s u r a n ce C o m p a ny           .        .        ..
        N ew    Z e a l a nd I n s u r a n ce C o m p a ny   L t d.       .        .        ..
        N o r w i ch   U n i on  F i re  I n s u r a n ce S o c i e ty L t d.
        P h o e n ix  A s s u r a n ce C o m p a ny   L t d.               .        .        ..
        P r o v i n c i al I n s u r a n ce C o m p a ny L t d.  .       .         .         ..
        Q u e e n s l a nd  I n s u r a n ce C o m p a ny   L t d.         .        .         ..
        R o y al  E x c h a n ge  A s s u r a n ce              .       .       .       .      ..
        R o y al  I n s u r a n ce C o m D t my   L t d.        .        .         .         ..
        S c o t t i sh U i i on & N a t i o n al  I n s u r a n ce C o m p a ny    .
41 S k a n d ia I A s u r a n cc C o m p a ny L t d. . . . ..
42      S o u th  B r i t i sh I n s u r a n ce C o m p a n y L t d.      .        .         ..                    18,42,000
43      S un   I n s u r a n ce O f f i ce L t d.               .       .      .       .       ..                  25,86,000
44      S w i t z e r l a nd G e n e r al I n s u r a n ce C o m p a ny  L t d.    .                                6,35,000
45      T h r e a d n c e ' - He I n s u r a n ce C o m p a ny L t d.      .        .        ..                           T,000
46      T o k io  M a r i ne  & F i re   I n s u r a n ce C o m p a ny   L t d.    .                                   92,000
47      U n i on   I n s u r a n ce S o c i e ty of  C a n t on  L t d.   .        .         ..                     5,89,000
48      U n i t ed  S c o t t i sh I n s u r a n ce C o m p a ny   L t d.  .        .        ..                        83,000
49      W e l f a re  I n s u r a n ce C o m p a ny   L t d.    .         .        .         ..                          1,000
5°     W e s t e rn   A s s u r a n ce C o m p a ny             .       .       .       .       ..                13,92,000
51      Y o r k s h i re I n s u r a n ce C o m p a ny   L t d. .         .         .         ..                  16,31,000
52      Z u r i ch I n s u r a n ce C o m p a ny    L t d.      .         .        .         ..                          1,000

S. L. SHAKDHER,

Secretary.

PRINTED BY TITE CHNEEAI, MANAGErt, CJOVERNMENT OF INDIA PHESS, MINTO ROAD, NKW DELHI AND PUBLISHED BY THE MANAGED OF PUBLICATIONS, DELHI, 1 9 72